Women are a driving force for Wall Street, and predominantly male financial advisers ignore them at their peril.
American women currently control $12 trillion in assets — more than 1 in 3 total dollars — with that figure expected to balloon to $22 trillion in the years ahead.
That’s according to a report issued by Wells Fargo’s First Clearing brokerage and the Cannon Financial Institute, which says that long gone are the days of the husband and his stockbroker retiring to the study to discuss their financials alone.
“The women’s wealth market, far from being a niche, is the very stuff of economic survival,” the report said. Women are becoming a bigger part of the high-net worth market.
Knowing your clients — both sexes — is the beginning of sucess for advisers. A look at recent demographics shows the economic might behind women.
* 60 percent of master’s degrees and 52 percent of doctorate degrees were conferred upon women in 2010.
* 48 percent of MD degrees were awarded to women in 2010, a sharp rise from 27 percent in the mid-’80s.
Today, a little more than a third of those who are high-net worth investors are women, says Cannon Financial Institute Vice President Linda Eaton. “And we can confidently predict that number will pass 50 percent over the next decade,” she says.
Besides their rising career tide, US women also have the benefit of inheriting their family’s assets, and 70 percent will outlive their husbands, according to the report.
The survey says that male advisers often don’t understand the difference between how men and women consider investing.
In 2009, the Boston Consulting Group spoke to hundreds of women with investable assets of at least $250,000. Most said they were not happy with their advisers.
“Among the most unhappy,” the study said, “were women in the $1 million to $5 million segment, a sweet spot for many advisory firms.” Advisers, the study’s authors say, should think about the assets and who could be controlling them in the future.
“The decision-maker on money is oftentimes the woman,” Bill Coppel, chief client growth officer for First Clearing, says. He adds that it is women who frequently arrange for bill payment each month.
The danger for many in the financial-services industry, Eaton adds, is that these women have a different approach to managing money — an approach that is often not understood — so they walk.
“More than 70 percent of widows choose different financial advisers once their husbands die,” Eaton notes. “Their advisers simply didn’t develop relationships with them.”
The problem, Coppel adds, can largely be traced to the financial-securities industry being male-dominated. Women only make up about a third of the advisers.
Eaton cautions that female advisers can make the same mistake — not spending enough time establishing a relationship with the woman, even though she may seem to be the junior financial partner.
So what should advisers do?
The study recommends that advisers take a five-step approach to retaining and obtaining more female clients: commit, contact, connect, care and cultivate.
Eaton says that even when the husband is the dominant member in a financial relationship, the adviser should attempt to understand the wife’s financial goals and view of money.
“Women seek relationships,” according to the study. “They want and expect their adviser to be interested in their lives as well as their financial goals.”
Women will control more than half of America’s household assets in the next eight years, a study says.
2012
Total: $30.2 trillion
Women control: $12 trillion
2020 (Est.)
Total: $42 trillion
Women control: $22 trillion
Source: First Clearing/ Cannon Financial